PartyGaming clicks with players and lifts investors' spirits

Partygaming, owner of the world's biggest internet poker site, lifted investors yesterday when it said it saw a "marked improvement" in trading.

PartyPoker.com's operator said poker revenues from its own players - as opposed to those brought to the site from marketing companies known as "skins" - were up 10pc in the past three weeks, against the third quarter average.

The news, coupled with a 32pc rise in third-quarter revenues to $220m (£125m), sent the shares up 8 to 86p.

It lifted other gaming stocks, with 888 Holdings up 16¾ to 154½, Sportingbet rising 23½ to 283½p and Empire Online 6 ahead at 89½p. The entire sector has been in the doldrums since PartyGaming warned at the beginning of the September that growth had slowed only 10 weeks after its four main owners sold £1billion of shares in the company's London float. At the time of the warning, the shares, floated at 116p, stood at 156¾p.

Yesterday, Richard Segal, PartyGaming's chief executive, said the City had overreacted.

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"We were talking about the market growing less rapidly than we expected, but we were still talking about 4pc growth per quarter, a compound 17pc a year," he said.

"Next day people were saying the shares were ex-growth and online poker is going to die. I'm not sure that is very fair."

Poker revenues, including skins, rose 38pc to $209m in the third quarter compared with this time last year and 4pc higher than the second.

Mr Segal said he was seeing the benefit of PartyGaming's decision a fortnight ago to switch its 9m players on to an upgraded platform, which excludes players brought by its skins, such as Empire Online and Multipoker.

Mr Segal said PartyGaming remained on track to launch a "shared purse" for this platform in the first half of next year, allowing players to use the same account to play poker and other games such as blackjack and roulette.

"Those players motivated by liquidity want to play in the biggest game in town, so there's every reason to come to the PartyPoker site."

Simon Champion, an analyst at Deutsche Bank, said: "I don't think the market has given them full credit for what they did two weeks ago."

PartyGaming, which said total active player days rose 53pc to 12.2m in the third quarter, against the same time last year, said it was happy with analysts' full-year forecasts.

Andrew Lee, an analyst at house broker Dresdner Kleinwort Wasserstein, expects $519m profits this year and $618m next.

He was forecasting $689m profits for 2006 before last month's warning.